Cenvat credit on industrial washing machines was allowed where factory use and statutory hygiene compliance established nexus.

Industrial washing machines used in the manufacturing premises for washing employees' uniforms were treated as capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004 because they were installed and used in the factory. The mandatory requirement to maintain clean and hygienic uniforms under the Drugs & Cosmetics Rules, 1945 was considered sufficient statutory compliance linked to the manufacturing establishment. On those facts, the washing machines were found to have the necessary nexus with the factory operations, making Cenvat credit admissible and defeating the Revenue's objection.

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Issues: Whether Cenvat credit was admissible on industrial washing machines used in the manufacturing premises for washing employees' uniforms.

Analysis: The machinery was found to fall within the definition of capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004 and to be used in the factory of the manufacturer. The requirement of providing clean and hygienic uniforms was also treated as a mandatory compliance under the Drugs & Cosmetics Rules, 1945. On these facts, the washing machines were held to have a sufficient nexus with the manufacturing establishment for credit eligibility.

Conclusion: Cenvat credit on the industrial washing machines was admissible and the Revenue's challenge failed.

Ratio Decidendi: Where equipment installed and used in the factory satisfies the definition of capital goods and is required for mandatory statutory compliance connected with the manufacturing premises, Cenvat credit on such equipment is allowable.

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